An Oil Bear Blinks

The oil business is no stranger to hedging. Neither are the analysts who track it.

Sanford C. Bernstein has been consistently bullish on oil prices even as others, notably Citigroup, foresee weakness. Yet with oil prices down 7% this year, even Bernstein seems to be entertaining some doubts.

On Friday, it put out a report called “What a Conceivable (but Still Unlikely) Bear Case for 2014 Global Oil Price Looks Like.” As the caveats indicate, Bernstein is nowhere near reversing its positive view. Rather, it analyzes how three big swing factors—Libya, Iraq and Iran—might, just might, add to oil supply this year, moderating prices. Bernstein estimates they might boost the world’s effective oil capacity by 450,000 barrels a day. That would be meaningful: Effective spare capacity currently stands at about 3.4 million barrels a day.

Hence, Bernstein sees “considerable volatility for shorter-term investors”; in plain English, oil could fall in 2014. But it remains “bullish long term oil price.” In Wall Street-ese, that is a way of saying this year is a buying opportunity. Who says doubt discourages investment?